Housing recovery not even lurking in the shadows

Mr. Cramer admitted on Mad Money that buyers would be reticent if they knew
there was a huge back log coming due. However, since Mr Cramer isn't in the Mortgage business, and doesn't closely monitor the real time situation in
housing, he doest see the "elephant" just behind the curtain.

Well, with today's numbers it is clear that builders know the elephant has
emerged.

Home buyers today are a bit more savvy, as well as cautious, and many want a
deal. They are going to look for a short sale. These transactions do take much
longer than a traditional clean purchase. But many buyers are willing to wait
and tolerate the inconvenience for a better price. Buyers believe that short
sale homes are a much better deal and worth the risk.

In our mortgage company, we have seen this with increasing frequency
with the purchase loans we have done. Over 50% of our purchase
loans this year have been people wanting to buy short sales.

Builders would be wise to realize that any new housing starts will have to
compete with the short sales. So they won't aggressively expand their new
construction until they have a bit more confidence that they can compete.

This is why the housing numbers that came out today aren't too surprising.

What were those numbers? U.S. housing starts had it's worst number since 1984.
New construction dropped 22.5 percent last month, to an annual rate of 479,000
unit. In April of 2009 that record low was set in new construction. (Around that
same time, summer of 2009, Mr. Cramer made his bottom call in housing). And,
ominously, building permists were down even further, at around 20%.

So, I repeat my earlier prediction in a challenge to Jim Cramer. We won't get
a true housing recovery until we get the shadow inventory resolved, a healthy
job market, and subsequently our confidence back as a nation to take on debt.

And this won't be soon, as Mr Cramer predicted. A rise in rates, more expensive
home loans, tighter guide lines restriction are all factors that are going to
hold housing back this year. Further complicating these factors are the
numbers of home owners who can't move because they are underwater on their
loans. Renting their home out to buy another property isnt an option. This
"elephant" behind the curtain is mired in muck and will take a long time to
move.

We have a long way to go before the housing bulls are correct and that the
bottom is housing has been made. It took a long time to create this bubble, and
will take a long while to deflate it. In fact, this is not just one elephant in
a room, this is a big ship of elephants, still trying to navigate its way in the
icy water.

When I scan the horizon from its decks, I still have yet to see a true recovery
on the horizon.

Logan Mohtashami is a senior loan officer in his family run Mortgage
Company, AMC Lending Group, which has been providing mortgage services for
California residents since 1987. LoganMohtashami.com